Standard costing and scientific management

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Rosalie C. Hallbauer FLORIDA INTERNATIONAL UNIVERSITY
STANDARD COSTING AND SCIENTIFIC MANAGEMENT
Abstract: Many have suggested that scientific management had a direct influence on the development of standard costing. This paper examines the relationship be-tween these concepts in broad terms. While it is concluded that no direct rela-tionship exists between scientific management and standard costing, the existence of an indirect relationship is acknowledged. Scientific management does not re-quire any specific type of accounting system and standard costing does not require a certain type of management organization to operate. However, certain reports developed for the scientifically managed enterprise, when added to the germs of standard costing that existed, expedited the evolution of standard cost-ing.
In 1970, the AAA Committee on Accounting History suggested among several research topics, one looking into the effect of sci-entific management on the development of standard costing. Prior to this, a number of authors suggested that there was a relationship between the two areas.1
A number of different statements have been made regarding the development of standard costing. These include the following:
—Standard costs . . . represent the application of the sci-entific management idea in one division of the business ... the factory.2
—Standard costing undoubtedly originated through the comparison of actual costs with estimates. As estimat-ing became increasingly scientific and accurate, the pos-sibilities of eliminating much of the detailed cost find-ing and of controlling costs of production in bulk were visualized.3
—Although scientific production control (beginning in the 1880's) may have predated the "not so well known" sci-entific cost control by about one third of a century, both had ... an engineering origin.4
These, however, do not clarify the evolutionary process.
This paper will not be an attempt at a complete documentation of significant events in the development of scientific management and standard costing.5 It will present some background information, a